The Multiple Step Problem

17 February, 2018

One of the key challenges with various approaches to road usage charging is the ‘Multiple Step problem’.

When policy reforms are politically challenging, a common approach is to try and break it up into smaller chunks and take multiple steps – the theory is that each step is not enough to trip people up, so by progressively tackling each step you eventually reach your overall objective. In a road pricing context, this has resulted in approaches that begin with a limited geographical reach such as a cordon zone, a limited user group such as heavy vehicles or the introduction of trials. These are not intended to be the end point but the first step on a roadmap to a more comprehensive road pricing regime.

We can now see how this approach is playing out in jurisdictions around the world that have introduced some form of road pricing.

London has had its congestion charge (a cordon) since 2003. When it was being planned, the cordon charge as it is today, was planned to be a stepping stone to a more comprehensive road usage charging solution for tackling congestion in London. The expectation was that once people could see the benefits of road usage charging, then the political opposition to extending the scheme would be manageable. The scheme was extended in 2007 to expand the cordon, however with lots of local opposition, this was quickly reversed when there was a change of Mayor.

New Zealand has had heavy vehicle road usage charging since the late 1970s. When it was being planned, it was expected to be expanded to include other vehicles as well. Forty years later, this has not proven to be the case and despite being mentioned in the manifestos of both major parties in the recent general election, it has been suggested that road usage charging for private vehicles is still a decade away.

Similarly, Germany has had a heavy vehicle scheme since 2005. Small steps have been taken to increase the scope of vehicles and roads that are charged. However, again, Germany is nowhere near implementing private vehicle road usage charging.

Heavy vehicle road usage charging as seen in New Zealand and Germany has been touted around the world as a stepping stone to widespread road usage charging and this is currently being floated in both Australia and the UK. However, the current evidence suggests that as a pathway to further road charging reform its benefits are extremely limited.

Singapore has had an electronic road pricing system since 1998 based around a cordon. The Government has recently procured a systems upgrade that will enable it, once implemented, to move to a more comprehensive road charging system. However, even in Singapore, with its reputation for being technologically progressive and taking on difficult policy reforms, the Government has not yet committed to moving to the more comprehensive road pricing regime.

The state of Oregon in the United States has implemented a ‘permanent’ distance based road usage charging scheme. This is a voluntary scheme for people to opt out of paying the gas tax (fuel excise) in order to move to the new scheme. Again, it is envisaged that this is a step along the road to widespread mandatory road usage charging. Legislation has been floated that will make the scheme compulsory for all new vehicles but not until 2026. Whether this legislation will ever become law, let alone actually implemented remains to be seen.

All of the examples above highlight the multiple step problem in road pricing – one policy step does not clear the path for another policy step. Therefore, implementing partial solutions as a step on the pathway to a more comprehensive solution looks like a flawed strategy. Policymakers should instead look at alternative solutions that offer a genuine pathway to a comprehensive solution or look at solutions that can deliver the policy outcomes they are seeking to achieve in just one step.